1
A CONCEPTUAL FRAMEWORK FOR
INTERPRETING
RECORDED HUMAN HISTORY
Douglass C. North, John Joseph Wallis, and
Barry R. Weingast
Summary of the argument
2
Three distinct social orders
 The limited access order, or natural state, is
a social order in which the political system
manipulates the economic system to create
rents that the political system uses to sustain
order.
 In open access orders, political, economic,
and other forms of competition sustain
order.

Why we need a new approach to Economic
History and Economic Development
3

It must include:
How
we understand the external
environment
Time
Cultural Heritage
An explanation of social change
must have these elements
4
Beliefs
Violence
Institutions and organizations

Social Orders
5
The key concept in our framework is the
social order.
 A social order:

 Is
comprised of economic, political, religious,
military, and social systems.
 Captures the way the different systems in the
larger society – political, economic, and social
systems – interact. That interaction defines the
way a society works.
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Period
Social Order
500,000 years ago
10,000 years ago
Primitive Order
10,000 years ago
Limited Access Order
200 years ago
Open Access Order
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Period
Social Order
500,000 years ago
10,000 years ago
Primitive Order
10,000 years ago
Limited Access Order
Transition
200 years ago
Open Access Order
Two Fundamental Types of
Organizations
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

Adherent Organizations:
-- Organizations whose internal
arrangements depend only on incentivecompatible, self-enforcing agreements.
Contractual Organizations:
-- Organizations that utilize third parties
to enforce some or all of their internal
arrangements.
Limited Access Orders
9


A limited access order solves the problem of
endemic violence and disorder through the
creation of a political and economic system we
call the Natural State.
Natural states create incentive-compatible
agreements among powerful individuals and
groups by recognizing the privileges of each
individual to control valuable resources and
activities.
10


In a limited access order, only elites
possess the right to form contractual
organizations whose internal
arrangements are enforced by the
state.
Access to contractual organizational
forms is limited.
Typology of Natural States
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1) Fragile Natural States: Only a dominant
coalition; fragile; limited institutions.
2) Basic Natural States: A stable organization
of the state exists, with a potentially durable
institutional structure, but limited or no elite
organizations
3) Mature Natural State: Stable perpetual
state, and support for public/private elite
organizations.
Open Access Orders
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

The heart of an open access order is
fluidity and change in social
arrangements.
Open access to organizational forms
creates fluidity.
 All
citizens have the ability to form
contractual organizations.
 Open access creates and sustains both
economic and political competition.
Competition and Rents
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
Distinction between open access and
limited access orders
 Not
the presence or absence of competition
and rent-creation.
 But how society channels competition to
support access to institutions, rights, and
organizations.
 Competition erodes rents in both politics and
economics.
The Doorstep Hypothesis
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Some natural states move to
positions in which moves toward
open access can be sustained.

Doorstep Conditions
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Rule of law for elites
 Enfranchisement of the masses
 Support for perpetual elite organizations
 Political control of the military
 The conditions:

 Are
self-reinforcing;
 Create the possibility of impersonal exchange
among elites.
 Extend rights to all citizens
Conclusions
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
View of states
Limited Access Orders
Open Access Order
Fragile Basic Mature Doorstep
Two development Problems.
 Why standard advice for developing countries
-- “getting prices right” and market competition
-- fails in natural states.
 Alternative perspective.

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A CONCEPTUAL FRAMEWORK FOR
INTERPRETING
RECORDED HUMAN HISTORY
Douglass C. North, John Joseph Wallis, and
Barry R. Weingast